Despite the opportunities, a messy, fragmented, and unorthodox
mobile advertising system presents these developers with a
challenging way of doing business.

For one thing, China doesn't have the big mobile ad networks
found in the West. Instead, there are "channels,"
and the top ones, like Tencent, Baidu, and Qihoo, are responsible
for the large majority of app downloads across the country.

The major channels handle mobile advertising deals face-to-face
(rather than providing access to development kits)
and take
30 to 40 percent of revenue — and that is on top of an
additional 30 percent given to a mobile provider. The benefit is
that the app will be promoted within that channel's app stores,
and possibly advertised on its desktop services as well.

Additionally, if a developer chooses to go through one of China's
hundreds of smaller channels, it opens itself up to losing
potentially huge revenue to pirated versions. This is because the
big channels usually ensure the marketplace is free of pirated
copies of software for which they are responsible, while the
smaller app stores are open to abuse because the Chinese
mobile industry does not require them to be approved by phone
manufacturers.

The big channels' app networks are also essential because in
China, a massive
90 percent of app revenue is attributed to in-app purchases.
Most users do not spend any money within apps, but there are
"whales" who
have been found to spend thousands of dollars on their
phones. A bigger network means more chances for whales.

There are no signs that China's mobile ad marketplace is
consolidating into something neater. So for the foreseeable
future, an outsider's key to success lies with arranging a deal
with one of the major app distribution channels. And this comes
with the hope that its network makes it worth it to sacrifice 70
to 80 percent of the revenues.